Plan Forfeitures

Plan Forfeitures

Forfeitures are considered assets to the plan, and the plan document states the appropriate ways in which the forfeitures can be used by the plan. Typically, forfeitures can be treated as an additional employer contribution and allocated among remaining participants of the plan, applied to reduce future employer contributions, or used to pay administrative expenses of the plan.

The plan document indicates the forfeiture options available and can often dictate the preferred order and or allowed timing for the various options. Plan sponsors should review the plan document to determine that forfeitures are being accounted for in accordance with the plan document.

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If you need more information regarding this or any other topic affecting your retirement plan, visit our Withum ERISA Knowledge Corner online, follow us on Twitter at WSB_ERISA or contact us at [email protected] to arrange a free consultation today.

The information contained herein is not necessarily all inclusive, does not constitute legal or any other advice, and should not be relied upon without first consulting with appropriate qualified professionals for your plan’s individual facts and circumstances.

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